Brazil government keeps the credit “party” going

The Brazilian governmentis backto pumping credit to stimulateconsumptionat a time whenriskyingredients are in play: Brazilians neverowed ​​so muchand nevercommittedso great of aportionof their salariesto pay off debts. Since the2008 crisis,when the governmentincreased the supply ofcredit tostabilize the economy, thetotal debt of Braziliansjumped by 80.7% and their monthly debt service shot up 60%. Meanwhile, wages increasedat a much slower pace: 33.3%.

According tothe CB, every Braziliancurrently owes a record 42% of their yearly salaries. Justthree years ago, before the crisis beganin2008, this debt ratio was 32%. It would belike sayingthat, on average, each of more than 192million Brazilianscurrently owe R$3,724tobanks.This number used to be R$2,093 in 2008.The CB’s director ofeconomic policy, Carlos Araujo Hamilton,saidearlier this monththat the institutionis not concernedwith the increasein household debt, considering that interest hasfallen and thelabor market is in frank expansion.